Pacific Crest Hikes Activision Target To $30 On 'Starcraft,' 'WoW' And 'Overwatch'

In a report published Tuesday, Pacific Crest analyst Evan Wilson maintained an Overweight rating on Activision Blizzard, Inc. (NASDAQ: ATVI), while raising the price target from $25 to $30.Analyst Evan Wilson wrote, "We're publishing our initial title model for ATVI's 2016. After E3, we feel we have a strong view into the slate and are changing our analysis of the year from top-down to bottom-up; typically we do it later in the year as we get a better sense of the cadence of releases."Wilson believes that the company "is set up" to generate "the most profitable 1H in company history" in 2016. In the report Pacific Crest noted, "We expect the next StarCraft 2 expansion in March, the next World of Warcraft (WoW) expansion (tied to the Warcraft movie) in early June and Overwatch's commercial release in late June. Three Blizzard releases (with only modest capitalized software), combined with potential high-margin growth from Hearthstone, Heroes of the Storm and Call of Duty: China, could lead to a very big earnings number."Wilson expects Destiny 2 to be released in September next year, and believes it would be more profitable than Destiny 1. "Now that the heavy lifting on the technology side is done, we expect the relatively short development of Destiny 2 to produce much-improved margins on a similar sales level."The EPS estimate for 2016 has been raised from $1.40 to $1.60. Wilson added that downside to the company's stock was "limited," while there was opportunity for Activision to beat the Street expectations.